This value fund manager is sticking with Netflix and Facebook’s parent company — and has a new position in another megacap tech stock

Investment letters are released about a week after the end of the first quarter, and if there’s one constant, it’s for many portfolio managers to explain the hammer, the Netflix NFLX
and Facebook parent Meta Platforms FB,
lasted between January and March.

Bill Nygren, portfolio manager for the $5 billion Oakmark Select Fund OAKLX,
was hit particularly hard by the Netflix and Meta slumps as this fund invested heavily. “While the portfolio is well-positioned for rising interest rates and higher oil prices — both of which were prominent earlier in the year — two company-specific earnings reports dampened an otherwise solid quarter of relative performance,” he said, commenting on the 6% decline in the first quarter stated, even with two energy holdings, APA Corp. APA,
and EOG resources EOG,

Netflix, he said, is experiencing a COVID-19-induced hangover, but he said the company used the price weakness to increase its exposure. “If you look at Netflix’s business development over the longer term, you hardly see any disruption in the franchise,” he said.

Meta Platforms, after being violated by Apple’s privacy policy, is now being assessed as not growing at all, he said. To increase exposure to meta platforms, the company sold put options. “If other investors believe our companies are significantly riskier than we are, option prices will be higher than our estimate of their intrinsic value. When opportunities like this arise, we sell puts or calls as an alternative to buying or selling stocks,” Nygren said.

Lithium Motors LAD,
is a new investment for the Select Fund. Nygren said the car dealership not only has top-tier operations but can grow by acquiring smaller dealerships. Online retail platform Driveway could be a major contributor over the next five to seven years. “With a share price of less than 7 times management’s 2025 EPS target and significant future growth potential from Driveway, we believe Lithia shares are a bargain today,” he said.

At $17 billion Oakmark Fund OAKMX,
the fund sold put options in Amazon AMZN,
Get in touch with the retail and cloud computing giant. “More recently, concerns about rising capital spending have weighed on the stock — as they have historically — giving us another opportunity to buy shares at an attractive multiple of normalized earnings and a discount to enterprise-weighted enterprise value to sales multiple times.” “, he said.

Pinterest PINS,
is a company in which the Fund has been able to reinvest. “Although Pinterest had more than 430 million users worldwide at the end of the year, the company is still in the early stages of monetizing its platform. We believe its shares are trading well below fair value on traditional metrics such as enterprise value-to-sales as a percentage of revenue, as well as when we compare ultimate revenue and margin potential to more mature internet companies,” he said.

Equifax EFX,
Global Payments GPN,
consoles PHM,
and Salesforce CRM,
were also new positions while it sold ADP ADP,
Mastercard MA,
and S&P Global SPGI,

The Buzz

US consumer price growth accelerated to 1.2% in March, the Labor Department reported on Tuesday. In the last 12 months, prices have increased by 8.5%. However, core price growth slowed to 0.3%.

US stock futures ES00,

after the report was released, and the yield on the 10-year government bond TMUBMUSD10Y,
slipped to 2.72%.

Earlier, the NFIB Small Business Index fell for the third straight month, hitting its lowest level since April 2020. The percentage of owners raising average selling prices rose four points to 72%, the highest in the survey’s history .

The White House said it will allow more ethanol in gasoline over the summer, which could save an average of 10 cents a gallon.

Data Journal DJCO,
the newspaper publisher, whose investment portfolio is managed by Berkshire Hathaway vice chairman Charlie Munger, reduced its stake in Alibaba Group BABA,
halved, according to the latest filing with the Securities and Exchange Commission.

CarMax KMX,
Stocks fell in premarket trading after missing earnings expectations.

top ticker

Here were the most active stock ticker symbols on MarketWatch as of 6 a.m. Eastern.


security name






AMC entertainment




Digital World Acquisition Corp.


Mullen Automotive









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Do you want more for the coming day? Sign up for The Barron’s Dailya morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch contributors. This value fund manager is sticking with Netflix and Facebook’s parent company — and has a new position in another megacap tech stock

Brian Lowry

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